AI Insights
The case involves two educational trusts, St. Xavier's Education Trust and St. Lawrence Educational Trust, which appealed against the cancellation of their registration under section 10(23C)(vi) of the Income-tax Act, 1961 by the Principal Commissioner of Income Tax (Central), Nagpur. The cancellation was based on a survey that revealed discrepancies in vouchers related to bonuses, perquisites, and allowances, which were not fully detailed or substantiated. The trusts argued that the amended provisions of the Act, which were applied retrospectively, should not affect the assessment years in question. The Tribunal examined the legal framework, the actions taken during the survey, and the responses provided by the trusts, ultimately deciding that the cancellations were not justified.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 137698 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
03-08-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
01-08-2023
Assessment Year
misc
Appeal Filed On
17-05-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ̳B‘ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.599/PUN/2023 Assessment Years : 2009-10 to 2019-20 St. Xavier‘s Education Trust, R-7/1, Town Centre, CIDCO, Aurangabad – 431 003 Maharashtra PAN : AACTS4140D Vs. The Pr.CIT(Central), Nagpur Appellant Respondent ITA No.600/PUN/2023 Assessment Years : 2009-10 to 2019-20 St. Lawrence Educational Trust, Gut No.42, Sunderwadi, Salta Circle, Aurangabad – 431 003 Maharashtra PAN : AAATS5598P Vs. The Pr.CIT(Central), Nagpur Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : These appeals by two different but connected assessees are directed against the separate orders dt. 21-03-2023 passed by the ld. Pr. Commissioner of Income Tax (Central), Nagpur under section 10(23C) 15 th proviso clause (b)(ii) of the Income-tax Act, 1961 Assessee by Shri Sachin P. Kumar Revenue by Shri Ajay Kumar Kesari Date of hearing 02-08-2023 Date of pronouncement 04-08-2023 ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 2 (hereinafter also called ̳the Act‘). Since a common issue is raised in both the appeals, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. 2. ITA No.599/PUN/2023 is the appeal by St. Xavier‘s Education Trust, which was extensively argued by both the sides. Pithily put, the facts of the case are that the assessee is a trust which was granted registration u/s.10(23C)(vi) of the Act on 12-05-2008. The assessee is running five schools, namely, : Sr.No. Name of the School Location 1 St. Lawrence High School Town Centre, CIDCO, Aurangabad 2 St. Lawrence High School (Marathi) N-1, CIDCO, Aurangabad 3 St. Lawrence High School Jalgaon 4 St. Peter‘s School Bangalore 5 Kishanlal Tapadia Memorial School Near A.S. Club, Waluj, Aurangabad 3. A survey action was taken u/s. 133A of the Act on 27-02- 2019. During the course of survey, certain vouchers were found bearing only signature of the recipients but the details of recipients, amount and signature of Trustee/Accountant and details of expenses were not mentioned. These vouchers pertained to Bonus, Perquisites and Allowances etc. Statement of Ms. Flavia Alburquerque, a trustee of both the trusts, was recorded u/s.131 on the date of ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 3 survey, wherein, she admitted undisclosed income of Rs.9.00 crore relating to both the trusts in this batch of appeals. The amount surrendered was spread over certain years in both the trusts. Returns were accordingly filed thereafter, duly incorporating the income offered by the trustee. The assessments also got completed consequently. Thereafter, the Assessing Officer (AO) made a reference to the Pr.CIT, Nagpur for cancellation of registration granted to the assessee-trust u/s.10(23C)(vi) of the Act. Acting on the same, the ld. Pr.CIT cancelled the registration. Such cancellation was done for the assessment years 2009-10 onwards. Thereafter, a corrigendum was issued by the ld. Pr.CIT, Nagpur on 08-05-2023, specifically mentioning that the cancellation of the registration was for the assessment years 2009-10 to 2019-20. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. We have heard both the sides and gone through the relevant material on record. At the outset, the ld. AR submitted that the Pr.CIT passed the order under clause (b)(ii) of 15 th proviso to section 10(23C) of the Act, which provision was substituted by the Finance Act, 2022 w.e.f. 01-04-2022. It was claimed that the ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 4 amended 15 th proviso could not have applied to the assessment years anterior to the amendment. Since the proceedings pertained to the A.Yrs.2009-10 to 2019-20, he put forth that the resultant order be declared null and void. This was strongly opposed by the ld. DR. 5. It is noted that the 15 th proviso to section 10(23C) has been substituted w.e.f.01-04-2022. This proviso deals with cancellation of registration which was earlier granted u/s.10(23C) of the Act. Since the subject matter of the provision is cancellation of registration, naturally, the provision relevant at the time of initiation of cancellation proceedings will be germane. Notice in the extant case was issued by the ld. Pr.CIT on 08-02-2023 and the order came to be passed on 21-03-2023. Thus, it is lucid that at the time of initiation of cancellation of registration proceedings, the prevalent law on the statute was the one as amended by the 15 th proviso inserted w.e.f.01-04-2022. The amendment is thus prospective in application but retrospective in effect inasmuch as it will govern the cancellation proceedings starting from the cut-off date of 01-04- 2022. To put it simply, the amendment is prospective qua the proceedings and not qua the assessment year. We, therefore, hold that the ld. Pr.CIT was justified in proceeding with the matter in ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 5 terms of the mandate of 15 th proviso inserted by the Finance Act 2022. The contention of the ld. AR is repelled. 6. Coming to the issue on merits, it is seen that the learned Pr.CIT cancelled the registration by invoking clause (b)(ii) of the 15 th proviso to section 10(23C) of the Act, pursuant to the reference made by the AO. Here, it would be apposite to consider the mandate of the relevant parts of the proviso under which the registration has been cancelled. 7. The opening part of the proviso states that where the trust etc. has been granted registration, inter alia, u/s.10(23C)(vi) and then clause (b) states that subsequently: `the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year‘, the Principal Commissioner or Commissioner shall: `(ii) pass an order in writing cancelling the approval of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution, on or before the specified date, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violation has taken place.‘ ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 6 The crux of the provision is that if registration was earlier granted u/s.10(23C)(vi) and thereafter, the AO makes a reference to the Pr.CIT for any previous year, the Pr. CIT shall pass an order cancelling the approval of the trust, if he is satisfied that one or more specified violations occurred. The term `specified violation‘ has been defined in Explanation 2, which runs as under : ―For the purposes of this proviso, the following shall mean "specified violation",— (a) where any income of the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has been applied other than for the objects for which it is established; or (b) the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has income from profits and gains of business, which is not incidental to the attainment of its objectives or separate books of account are not maintained by it in respect of the business which is incidental to the attainment of its objectives; or (c) any activity of the fund or institution or trust or any university or other educational institution or any hospital or other medical institution,— (A) is not genuine; or (B) is not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or (d) the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not complied with the requirement of any other law for the time being in force, and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality; or (e) the application referred to in the first proviso of this clause is not complete or it contains false or incorrect information.‖ ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 7 8. The ld. PCIT invoked the first three clauses of the Explanation for cancelling the registration, which cover the following three situations, viz., (i) Where any income of the trust etc. has been applied for objects other than for which it was established; (ii) Where the trust earns income from profits and gains of the business, which is not incidental to the attainment of its objectives; (iii) Any activity of the trust etc. is not genuine or is not being carried out in accordance with the conditions subject to which it was approved; 9. It is in one or more of the above mentioned three circumstances, that the action of the trust etc. in the present case would constitute specified violation, warranting cancellation of the registration granted earlier u/s.10(23C)(vi) of the Act. 10. The ld. Pr.CIT has opined that certain incriminating evidences were found during the course of survey action u/s.133A, which divulged that the assessee did not reflect the true and correct state of affairs - as the books were not available in any of the premises; the Audit reports filed along with the returns of income were doctored and not true; no supporting bills and vouchers were found ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 8 during the course of survey; huge expenditure was debited to financials which was either not vouched or not verifiable; and further that Ms. Flavia Albuquerque, trustee of the assessee-trust, in her statement recorded u/s.131 accepted that there were discrepancies in expenses booked under various heads, which instigated her to offer additional income. The ld. Pr.CIT completed the chain, firstly, by connecting surrender of income with deficient vouchers; and then deficient vouchers with the fact that the funds were diverted and misappropriated and resultantly not applied wholly and exclusively to the objects for which the assessee was established. This is how, he held that the assessee made specified violation in terms of clause (a) to (c) of the Explanation 2. We have noted above that the proposal to cancel the registration u/s.10(23C) emanated from the AO, who linked it with the survey action and the statement of Ms. Flavia Albuquerque accepting additional income of Rs.9.00 crore. The ld. Pr. CIT has heavily banked on certain questions from the statement and rather reproduced the same in his order to fortify his view of cancellation. Thus, it is manifest that the entire case of cancellation of registration is premised on the statement of Ms. Flavia Albuquerque recorded on the date of ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 9 survey. Ex consequenti, it becomes crucial to examine the statement, a copy of which has been placed at page 267 onwards of the paper book. 11. In response to question no.4, she submitted that: `The books of account (vouchers and musters) of Cambridge School is maintained in this premises only. The books of account in tally of St. Lawrence Education Trust & St. Xavier‘s Education Trust are maintained and kept with the Chartered Accountant, Mr. Ashok Rathi.‘ This reply controverts the view point of the ld. Pr. CIT that no books of accounts were available. Rather, the reply indicates that the books of account were maintained, some at the assessee‘s premises and others in a tally with the CA. This part of the statement has not been controverted by any other material or any further questions in the statement. Here it is relevant to mention that the assessee-trusts were operating its educational institutions from seven different locations in three cities, namely, Aurangabad, Jalgaon and Bangalore. It was practically not possible to produce the vouchers from all the locations before the survey team on that very date itself. It has been brought to our notice that when the assessee furnished returns declaring additional income, the assessment took ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 10 place for the relevant years and the assessee produced more than 6000 vouchers, complete in all respects, before the jurisdictional Assessing Officers. This contention has again not been faulted with by the ld. DR. 12. Question no.6 refers to a Notebook impounded as annexure A Sr. No. 1 maintained by Vaishali Tushar Mohol, working as Accountant with Cambridge School, Aurangabad. Accepting the description of the note-book shown, the trustee stated that it contained daily collection of fees, cash receipts and cheque receipts details, cash expenses details and net day-wise cash balance in respect of Cambridge School, which was correctly maintained. Then, she explained the modus operandi from the collection of fees at Cambridge School till it gets deposited in the bank, by stating that Vaishali Tushor Mohol hands over the net cash in hand daily to her with details, which is deposited in the bank after 2-3 days. In response to question no.11 about the source of the availability of cash to the tune of Rs.25,45,790/-, she submitted that the cash was out of admission fee receipts of Cambridge school. The last cash deposited in the bank was on 21-02-2019, which included closing cash till 20-02-2019. Cash collection from 21-02-2019 till the date ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 11 of survey, namely, 27-02-2019 was kept at her residential premises, which amounted to Rs.24,75,400/-. The differential amount of Rs.70,390/- was stated to be cash out of withdrawals and family savings. There is nothing amiss in the reply nor has it been displaced by any of the Revenue authorities. 13. The ld. Pr.CIT has accentuated on question nos. 14 to 16 to justify the cancellation of registration. Thus, it becomes necessary to elaborately examine these questions. 14. Question no.14 by the survey team was: ―From the verification and perusal of loose paper bundle No.1 it is observed that on some vouchers there is only signature of recipient is mentioned but details of recipient, amount and signature of trustee/accountant and details of expenses are not mentioned. In some instances, amount is mentioned but no other details are mentioned while in some instances neither sign of principal, accountant nor of the trustee are on the vouchers. Kindly explain the discrepancies‖. The trustee expressed her inability to substantiate the said discrepancies. We need to highlight the nature of discrepancy in the vouchers from the question raised by the survey team. Firstly, it restricted itself to the vouchers anent to ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 12 Bonus and perks etc. to staff and secondly, these vouchers were duly signed by the recipients. The only deficiency recorded by the survey team is that the vouchers were having only signatures of the recipient but details of recipients, amount and signature of trustee etc. were not mentioned. This shows that the assessee paid salary, perquisites and bonus to its staff and obtained signatures on the corresponding vouchers. The only lacunae which remained in the vouchers was that the details of the recipients or the signatures of the trustee/accountant etc. were not filled up. Further, these were the vouchers relating to bonus and perks etc. to staff. At the time of survey, the staff was, naturally, present. The survey team did not examine the staff members for ascertaining the veracity of their signatures against payments shown towards bonus or perks etc. given to them, leaving the end loose. This shows that the veracity of the bonus and perks etc. was not disproved. 15. Question no.15 required her to : ―Kindly go through the audited accounts of St. Lawrence Education Trust and St. Xaviers Trust. From the verification of audited income and expenditure accounts, it is observed that there are expenses booked under head Bonus, Perks and Allowances, Office expenses, Tours and ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 13 travelling expenses, Building repair expenses. Most of the expenses are in cash and in some instances expenses are booked in the month of March. Also, from the verification of ledgers with vouchers of the said expenses it is observed that the vouchers regarding bonus, perks and allowance head and other heads are not found at the premise. Kindly explain where the said vouchers are kept and explain the discrepancy‖. Her reply was that: ―Sir, the vouchers of expenses are kept at respective schools. Sir, I am not in a position to substantiate the said discrepancies as mentioned in the question and also not in a position to give the details about vouchers which are found at the various premises where survey is conducted.‖ The first part of the question just records the factual aspect that the assessee had booked expenses under various heads in cash. The discrepancy was pointed out in the later part of the question that the vouchers regarding bonus, perks and allowances were not available in the premises and question was that where were they kept. The reply was swift that the vouchers were kept at respective schools. There was no further questioning on this score. Howbeit, the answer records her inability to substantiate the discrepancy. The question and the answer again show that there was nothing wanting on the ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 14 part of the assessee. Another connected question no.38 was about the expenses booked under the head bonus, allowances and perks for A.Y. 2013-14 in the case of St. Lawrence Education Trust. She again replied that: ―We used to pay salary, bonuses and allowances to non-teaching staff in cash during those years as they used to demand in cash. We accept the anomaly of the expenses. However, it is not that entire expenses in March are bogus. It is possible that some expenses incurred in earlier months that were left to be debited earlier might have booked in the month of March. However, we are not able to substantiate all such debits and are also not able to produce all the vouchers in respect of the above expenses debited in March 2013. However, in order to cover up the discrepancies and omissions and commissions I have already agreed for the disallowances in this regard and also agreed to pay taxes on the surplus emerging out of such disallowances‖. The answer is self explanatory. 16. Through question no.16, she was asked that: ―you have booked substantial amount under head bonus, allowances and perks in The St. Lawrence Trust ranging averagely 5-6 Cr annually. Similar types of expenses are also booked in the St. Xaviers Trust. ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 15 Since such a huge expenditure is booked under this head and the substantial portion of vouchers regarding these expenses are not produced by you. Also similar type of discrepancy is observed in other heads of expense. Kindly explain the same‖. In response, she submitted that ―Sir, I agree that there are discrepancies in some expenses booked under these heads. I am not in a position to substantiate the whole expense. Considering all the discrepancies in mind in all the schools run by both the trust as pointed by you in earlier question regarding expenses and also keeping in mind provisions of Income Tax Act, I am of a considerate view that there will be surplus of 8-9 crores in both trust in excess of 15% of receipts as I am unable to explain and provide the relevant bills and vouchers in respect of expenses claimed by the trust as mentioned and discussed above. I am offering the amount of roughly around 9 crores as taxable income totally in both the trusts for various assessment years to cover up the discrepancies pointed out above. The rough tax on the same will come to around 3.50 Cr to 4.0 Cr as per discussion with my CA. But, I am not able to give detail breakup of the same assessment year wise and trust wise, as my CA is out of town. I will give the detail breakup of the same as and ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 16 when the CA arrived and pay due taxes on the same in due course‖. This question and answer again refer to the expenses under the head bonus and perks to staff etc. and her making a surrender, which aspect has been discussed supra. 17. She was also enquired about the details of objects of the trust and the list of educational institutions run by the trusts. She gave answer, enlisting the educational institutions of the trusts. In response to question no.24 about the status of income-tax returns filed by two trusts, she submitted that: ―Both the Trust are regular filer of return of income and both the trusts had filed return of income till assessment year 2018-19.‖ This shows that the assessee was regular in filing income tax returns. Then, question no. 25 was aimed at enquiring about the activities of school, number of students, which was also promptly answered giving all the needful details. Question no.26 was enquiring about the fee structure for the students of the school. She gave the reply, which has been tabulated in the statement, giving an account of monthly fees charges from KG to 10 th standard ranging between Rs.5,200/- to Rs.5,600/-. She further submitted that: ―This monthly fees includes tuition fee, bus fee, mess fee & sport & other activities fee‖. Question No.28, ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 17 which is again quite relevant, was directed at enquiring as to whether school was charging any amount other than the fees mentioned above from the students, to which reply was given in negative. Question no.37 was about the details of teaching and non- teaching staff working at Cambridge School, Aurangabad, to which she responded by giving necessary details. 18. Once again her statement was recorded on 06-03-2019, that is, after the survey action, whose copy has been placed at pages 277 and 278 of the paper book. The emphasis was again on expenses incurred in respect of bonus, allowances and perks, whose vouchers did not contain complete details. 19. In addition to the non-incriminating answers given by the trustee in her statement and our separate comments thereto supra, there are certain other crucial factors, which need to be taken note of. It is not the case of any of the Revenue authorities, who either conducted the survey or the AO finalizing assessments and making a reference to the ld. Pr.CIT for cancellation of the registration or even the ld. Pr. CIT in the impugned order, that the assessee collected any on-money from its students over and above the declared fee; or that it was engaged in any activity other than ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 18 imparting education; or that it exaggerated expenses by foul means (except the inference drawn on the basis of incomplete vouchers of bonus and perks etc.) and that the resultant cash was siphoned off by the trustees. There is no reference to any material found during the course of survey indicating the trustees taking away some cash for personal use. The only deficiency, on the basis of which the surrender was made, was certain discrepancies in the expenses vouchers pertaining to salaries and bonus etc., which aspect we have discussed earlier. The mere fact, that some of the vouchers were deficient and the assessee made and honored surrender of Rs.9.00 crore, is not decisive in cancelling the registration u/s.10(23C), unless the `specified violation‘ is established. 20. We have noted above the command of Explanation 2 to section 10(23C) which enumerates `specified violation‘ and also the fact that the ld. Pr.CIT has taken cognizance of the first three violations for cancelling the registration. 21. The first specified violation given in Explanation 2(a) is that the income of the trust etc. is applied other than for the objects for which it is established. This violation deals with the application of income on objects other than for which the trust was established. ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 19 An inference has been drawn that the assessee recorded bogus expenses and took away the corresponding cash for personal use by the trustees. There is no basis for drawing such inference, firstly, because the deficient vouchers clearly bore signature of the recipients but did not carry other details and secondly, no evidence was found during the course of survey that the assessee applied any amount for any object other than for which it was established. Apart from the deficient vouchers of certain expenses relating to salary, perquisites and bonus etc., there is no evidence to demonstrate that the assessee spent the income on any object other than for which it was established. 22. Explanation 2(b) deals with the specified violation towards the trust etc. having income from ̳profits and gains of business‘, which is not incidental to the attainment of its objects. This clause deals with the receipt of income. The entire case of the Revenue is founded only on deficient vouchers for expenses. There is not even an iota of indication, either in the survey statement or in the impugned order, that the assessee earned any income from `profits and gains‘ that was not incidental to the attainment of its objectives. ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 20 23. Explanation 2(c) deals with a specified violation of ―any activity‖ of the trust etc. which is either not genuine or is not carried out in accordance with all or any of conditions subject to which the approval was granted. The condition precedent for the applicability of this clause is the carrying out of ―any activity‖, which is either not genuine or not in accordance with its objectives. Obviously, the assessee carried out only the activity of imparting education, which was not found to be non-genuine. Such activity was carried out in accordance with the conditions subject to which the assessee was approved. There is no evidence or reference to any material indicating that the assessee carried out any activity other than imparting education or that the activity of education so carried out was not genuine. 24. The above discussion amply proves that the assessee did not commit any `specified violation‘ in terms of Explanation 2 to section 10(23C), so as to attract the wrath of the proviso. 25. Before parting with this matter, it is pertinent to mention that, albeit, the assessee made a surrender in the survey proceedings and also offered the additional income in the corresponding returns, the assessee vehemently argued before the ld. Pr. CIT, as has also been ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 21 reproduced on pages 11 to 20 of the impugned order, that Ms. Flavia Albuquerque was forced to make a disclosure at the time of survey proceedings just on the basis of discrepancies in relation to certain vouchers; the survey team did not grant any time to the assessee-trust to present the evidence; and there was no documentary evidence to substantiate the disclosure of Rs.9.00 crore made for both the trusts. The assessee also submitted before the ld. Pr.CIT that though the surrender was illegally obtained, it avoided any litigation with the Department and abided by the survey declaration. 26. There is still another important aspect of the surrender of income during the course of survey. It is noted that the statement of the trustee, containing surrender, has been recorded during the course of survey but u/s.131(1) of the Act. Admittedly, it is a case of survey governed by section 133A. Sub-section (3)(iii) of section 133A empowers an income-tax authority acting under this section to ̳record the statement of any person which may be useful for, or relevant to, any proceeding under this Act‘. Sub-section (6) of section 133A provides that: `If a person under this section is required to afford facility to the income-tax authority to inspect ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 22 books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under sub-section (1) of section 131 for enforcing compliance with the requirement made‘. 27. On a conjoint reading of sub-sections (3) and (6), it emerges that the statement of the person surveyed is usually recorded u/s.133A of the Act. Recourse to sub-section (6) can be taken only if a person, who, inter alia, is required to have his statement recorded, either refuses or evades to do so. It is only then that the income-tax authority gets all the powers under section 131(1) including `examining him on oath‘. When we view the ingredients of section 131 in conjunction with section 133A, it becomes overt that whereas the statement u/s.131(1) is recorded on oath, statement u/s.133A is not recorded on oath. It goes without saying that a statement not recorded under oath has no evidentiary value. The Hon‘ble Supreme Court in CIT vs. S. Khader Khan Son (2013) 352 ITR 480 (SC), after noting that section 133A does not empower any income-tax authority to examine any person on oath, thus held that ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 23 such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. When we consider the recording of statement por una parte in the course of survey u/s.133A and por otra parte in the course of search u/s.132(4), the distinction becomes more glaring. Like the statement under section 131(1), section 132(4) also provides that the authorized officer may, during the course of search or seizure, examine on oath a person who is found to be in possession of any books of account etc. which may thereafter be used as evidence. It is, ergo, clear that whereas the statements u/s.131(1) and 132(4) are recorded after administering oath and hence have binding effect on the person making them, any statement made in survey u/s.133A(3), which legally cannot precede with administering an oath, has no evidentiary value and cannot bind the concerned person. A fortiori, no surrender in survey can be based merely on a statement of a person de hors any relevant evidence corroborating the existence of undisclosed income pro tanto. To put it simply, if there is no evidence as to the existence of undisclosed income but there is a surrender made during the course ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 24 of survey u/s.133A(3), such declaration has no legal legs to stand on. 28. Reverting to our context, the present case is that of survey. There is no mention of the fact anywhere that the assessee was non co-operative and hence recourse had to be taken to the provisions of sub-section (6) of section 133A. This shows that the statement was required to be obtained u/s 133A(3) without administering any oath. Consequently, any surrender made without the backing material about the existence of undisclosed income, was of no avail. We have noted that the survey party found certain expenses not properly vouched, which were deficient in some aspects. No quantification of such vouchers w.r.t. the books has been done and simply a surrender of Rs.9.00 crore came to be made by the assessee. This shows that either the statement was recorded unintentionally u/s 131(1); or as a smart move to get rid of the compliance of the rigid requirement of having corroborative evidence for surrender in the statement u/s 133A(3). We leave this issue here only by making it clear that the discussion anent to the legitimateness and legality of surrender is made only to examine the factual matrix of the case in the context of cancellation of registration. It has nothing to do with ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 25 the assessments based on such surrender, which have already attained finality. 29. From the foregoing discussion, it is manifest that the edifice of cancellation of registration has been erected on the statement of the trustee recorded during the course of survey action. Arguendo, it is presumed that the contents of the statement have a binding force and has evidentiary value, still it does not bring the case within any of the `specified violation‘. The 15th proviso to section 10(23C) unambiguously provides that : `the Principal Commissioner ... shall, ..... pass an order in writing cancelling the approval of such fund or institution or trust... if he is satisfied that one or more specified violation has taken place.‘ Thus, it is established that the occurrence of one or more `specified violations‘ is sine qua non for cancellation of registration. Since the assessee did not commit any specified violation, we are satisfied that the impugned order, cancelling the registration, is untenable. The same is, therefore, overturned. 30. Both the sides are in agreement that the facts and circumstances of the other appeal by the related trust in ITA No.600/PUN/2023 are mutatis mutandis similar. Following the ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 26 view taken hereinabove, we set aside the impugned order cancelling the registration originally granted u/s.10(23C)(vi) of the Act. 31. In the result, both the appeals are allowed in the above terms. Order pronounced in the Open Court on 4 th August, 2023. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; ददन ांक Dated : 4 th August, 2023 सतीश आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील थी / The Appellant; 2. 3. प्रत्यथी / The respondent The Pr.CIT concerned 4. DR, ITAT, ̳B‘ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अदधकरण ,पुणे / ITAT, Pune ITA Nos.599 & 600/PUN/2023 Sr. Xavier Education Trust St. Lawrence Educational Trust 27 Date 1. Draft dictated on 02-08-2023 Sr.PS 2. Draft placed before author 04-08-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
